Round one to small firms as Daily Mail campaign brings action from the Government

Business Secretary Peter Mandelson will extend the Government's pledge to pay all its invoices within 10 days

The Daily Mail's campaign to save struggling small businesses has scored an early breakthrough as Labour and the Tories back key planks of our package.

Politicians and business leaders rallied under our banner and the Government was stung into an early intervention to help firms described as the 'lifeblood of the nation'.

Business Secretary Peter Mandelson will today extend the Government's pledge to pay all its invoices within ten days. It will now also apply to regional agencies, which spend £750million a year.

Lord Mandelson will insist that all public bodies, including NHS trusts and local authorities, should follow suit. Official bodies are among the worst late payers, and such delays can mean disaster for suppliers.

Ministers are also setting out a £350million plan to help small firms retrain their staff in the face of the looming economic downturn.

Tory leader David Cameron went further, setting out plans to reform insolvency laws, cut payroll taxes by 1p for businesses with fewer than five employees and let small and medium-sized enterprises defer their VAT bills for up to six months.

Writing for today's Daily Mail, he said the cut in National Insurance - guaranteed for at least six months - would save a firm with four workers and an annual wage bill of £150,000 more than £100 a month.

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It would be paid for, alongside a cut in corporation tax for small firms to 20p, by abolishing some reliefs and allowances introduced by Labour.

Mr Cameron said it was clear many small businesses would be 'going to the wall' unless they got urgent help from the Government.

These are the guidelines which we believe can save small businesses

Devastating research, published yesterday, show that almost six times as many firms as last year are on the brink of collapse.

Between July and September, 4,566 were classified as having 'critical' problems. During the same period last year, there were just 791.

Mr Cameron said high taxes, red tape, falling consumer spending and 'irresponsible' banks were helping to make life a misery for an army of small businessmen and women.

The Government had rightly stepped in to shore up the 'beating heart' of the economy by bailing out leading banks, but now had to do the same for its 'lifeblood', small businesses.

Mr Cameron is also launching a campaign to persuade hundreds of thousands of small firms to claim up to £1,100 a year in rate relief.

The Tory leader was scathing about banks who are still blocking credit channels to small and medium-sized firms and cutting off overdraft facilities, even though they have been 'pumped by taxpayers' money'.

Entrepreneur Charlie Mullins, who set up Britain's biggest firm of plumbers, compared the banks to 'crooks in suits'.

Many small businessmen told the Daily Mail they are furious that billions of taxpayers' money is being used to bail out banks who are still hindering, rather than helping, them.

David Coates, chief executive of Davenham Group, which lends money to small and medium-sized businesses, said: 'If the banks do not adjust their behaviour quickly, we are in very real danger of large numbers of perfectly good businesses failing due to temporary cash flow problems, and for this to start a chain reaction which simply escalates the recession.'

Lord Mandelson said last night: 'Small businesses are the backbone of our economy. We know they are worried about what is happening - and we know we must do all we can to help them through these difficult times.

'Our builders, traders and manufacturers need steady cashflow to remain resilient snd we support the Daily Mail's campaign to encourage big businesses to pay their suppliers on time. That is why we in central Government have agreed to pay our suppliers as soon as possible - and our target is in less than 10 days. We are looking at other ways the Government can help and give a lead.

'Smaller companies need to be able to borrow if they are going to survive, and thrive when we see the economy improve. We welcome the Mail's support to make sure banks continue to make competitively-priced lending available to small businesses.'

Lord Mandelson, Gordon Brown and Skills Secretary John Denham will also announce today that all small firms are to be offered a 'skills health check' to assess their readiness for a downturn. Some £350million of Government funding will be redirected to help them retrain their staff.

In the Commons, Mr Brown said the aim of his £500billion bank bail-out was to ensure money flowed again to small businesses. He said the nationalisation agreements signed with lenders included a commitment to resume lending to small firms.

Stephen Alambritis, from the Federation of Small Businesses, said it was vital to support small and medium-sized businesses, which employ nearly 60 per cent of the private sector workforce. He said: 'They are the ones who will stop us going into a long and deep recession.'

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Round one to small firms as Daily Mail campaign brings action from the Government